Volkswagen subsidiary delays opening of $7B St. Thomas battery plant to 2029

Volkswagen subsidiary PowerCo Canada has pushed the planned opening of its $7-billion electric vehicle battery plant in St. Thomas, Ontario, to 2029, two years later than initially expected. The company says the revised timeline will allow the facility to incorporate next-generation battery technology while maintaining flexibility as the EV market evolves.

PowerCo shifts St. Thomas battery plant timeline

The factory, described as a battery “gigafactory,” was originally scheduled to begin operations in 2027. PowerCo confirmed the new timeline while announcing that Mississauga-based EllisDon Corporation had been selected as the project’s general contractor.

“St. Thomas is now expected to begin operations in 2029 to accommodate next-generation battery technology, while retaining the flexibility to scale over time as market conditions evolve,” the company said in a news release.

The project was first announced in 2023 and is expected to represent an investment of about $7 billion. The federal government committed up to $13 billion in production subsidies, while the development was projected to create approximately 3,000 direct jobs and tens of thousands of indirect jobs.

Construction began in October 2025, starting with foundation work. PowerCo had previously announced two major construction contracts for the site in August 2025.

St. Thomas continues preparations for battery investment

The scale of the project has prompted significant infrastructure planning across St. Thomas and surrounding communities. Municipalities and the Ontario government have undertaken road, sewer and other infrastructure projects to accommodate the population and economic growth initially expected around the plant’s 2027 opening.

Before the project was announced, Ontario allowed St. Thomas to annex land from neighbouring Central Elgin to provide sufficient space for the development.

Mayor remains confident despite two-year delay

St. Thomas Mayor Joe Preston said he remains confident in the project despite the revised schedule.

“They’ve picked a great local Canadian general contractor and in doing so, they had to adjust the [opening] date,” Preston said.

PowerCo has been hiring workers in the St. Thomas area since August 2025. Preston estimated that roughly 500 people are currently employed by the company in the surrounding region.

He pointed to “the number of employees they already have working and living in the city of St. Thomas, the amount of construction that’s going on in that site each and every day” as evidence that the development continues to move forward.

Preston also highlighted Yarmouth Yards, a major industrial park developed by the city to attract companies that complement battery manufacturing and the broader automotive supply chain.

Ontario calls EllisDon contract a major milestone

Ontario’s Ministry of Economic Development, Job Creation and Trade welcomed the selection of EllisDon as general contractor.

In a written statement, a ministry spokesperson said the contract “represents a major milestone as they work towards the start of production that will create thousands of direct and indirect jobs across the supply chain.”

The ministry did not specifically address the two-year delay.

“We look forward to continuing to work with PowerCo as they progress on their $7-billion gigafactory in St. Thomas that will position Ontario at the forefront of innovative battery and automotive production for decades to come,” the statement said.

Conservative MP questions impact of delay

Andrew Lawton, the Conservative MP for Elgin—St. Thomas—London South, described the delay as disappointing and raised questions about Volkswagen’s commitment to the project.

“I realize that Volkswagen is saying it’s just about pace and not about the overall commitment. But ultimately, it is about the commitment because we were expecting this to be moving forward at a speed that we’re just not seeing,” Lawton said.

He also called for clarity on what the federal government is doing to keep the project moving.

“We saw $13 billion worth of federal subsidies put forward to this and the promise — the expectation — was 3,000 well-paid local jobs, not to mention the construction jobs. All of this has been thrown into jeopardy right now.”

Ontario EV projects face changing market conditions

The revised St. Thomas schedule comes as several automakers adjust their Canadian EV strategies amid changing market conditions.

In April 2025, General Motors cited weaker-than-expected demand when it announced plans to halt production of the Chevrolet BrightDrop electric delivery van at its CAMI Assembly plant in Ingersoll, Ontario. Hundreds of workers were laid off.

Honda also delayed its planned $15-billion EV development in Alliston in 2025 before ultimately cancelling the project, saying it would continue assessing conditions in the electric vehicle market.

Canadian EV sales show signs of growth

Despite uncertainty surrounding some manufacturing investments, Canadian electric vehicle sales have shown periods of growth.

Statistics Canada figures released in June indicated that new EV purchases were more than 20 per cent higher compared with the same period a year earlier. Canadians purchased 8,672 new EVs in January, 12,547 in February and 21,574 in March, before monthly sales declined to 17,795 in April.

For St. Thomas and southwestern Ontario, PowerCo’s revised 2029 opening pushes back the expected economic impact of one of Canada’s largest battery manufacturing investments. Construction and hiring are continuing, while the project’s eventual scale will depend in part on battery technology developments and conditions across the North American electric vehicle market.